Covid-19

Laurence Ball, Gita Gopinath, Daniel Leigh, Prachi Mishra, Antonio Spilimbergo, 07 May 2021

How high is the ongoing US fiscal expansion likely to push inflation? This column presents new evidence that underlying (weighted median) CPI inflation has so far steadily declined since the start of the COVID-19 crisis, broadly as predicted by its historical Phillips curve relation. If the ongoing fiscal expansion reduces unemployment to 1.5-3.5%, as some predict, underlying inflation could rise to about 2.5-3% by 2023. If the fiscal expansion is temporary and monetary policy remains clearly communicated and decisive, there is little risk of a 1960s-type inflationary spiral.

David Bloom, Michael Kuhn, Klaus Prettner, 06 May 2021

In addition to the devastating human toll, the economic upheaval wrought by the COVID-19 pandemic illustrates the inextricable relationship between physical and economic health. This column presents an overview of the macroeconomic effects of the infectious disease epidemics of the 20th and early 21st centuries through the lens of recent COVID-19 research and explores the epidemic–economics nexus. It concludes that preventive policies, containment strategies, and early responses are more efficient, cost-effective, and manageable than combatting a full-scale infectious pandemic outbreak.

László Andor, Robin Huguenot-Noël, 05 May 2021

In the midst of a third wave of the Covid-19 pandemic affecting the European continent, the European Commission released the Social Pillar Action Plan, setting concrete targets on employment, skills, and poverty reduction to be reached by 2030. This new ‘social rulebook’ represents a welcome initiative from the EU to set itself long-term development goals. Yet setting new ambitions without the necessary means may risk backfiring. This column argues that to act as a game-changer, the Action Plan should place a greater emphasis on tapping Europe’s job growth potential where it lies, moving beyond a supply-side approach on employment promotion, and committing to greater ambitions in poverty reduction. 

Hans‐Helmut Kotz, Jan Mischke, Sven Smit, 03 May 2021

The future of productivity and economic growth in the US and Europe is uncertain. This column reviews evidence from eight economic sectors to lay out the key conditions for sustained recovery from the Covid-19 crisis. It suggests that the weak productivity growth that followed the Global Crisis can be averted if private and public sectors act together to strengthen demand and diffuse supply-side restructuring to all firms. 

Megha Patnaik, Andrea Lamorgese, Andrea Linarello, Fabiano Schivardi, 01 May 2021

In response to COVID-19, firms had to adapt to nationwide lockdowns and social distancing measures with little to no prior experience. This column examines the role of management in firms’ responses to the pandemic in Italy, the first western country to be badly hit by the outbreak, and finds that firms with structured management practices experienced lower declines in performance during the post-lockdown period. These firms were more likely to adopt labour-related strategies in response to the lockdown, including transitions to remote work.

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